Overwatch could pull in up to $720 million per year, according to Morgan Stanley report

$100 million per year is probably more likely, but that's still nothing to sneeze at.

In case there was any doubt that Blizzard's online FPS Overwatch is a huge success (and likely to keep growing), a Dot Esports report says investment management firm Morgan Stanley estimates in a research report that the game could pull in revenues of as much as $720 million—that's almost three-quarters of a billion dollars—per year.

That would require a nearly perfect outcome across multiple variable factors, not to mention doubling the number of teams in the nascent Overwatch League from 16 to 32. But even if Overwatch struggles, Morgan Stanley reported that Blizzard should pull in a bare minimum of $20 million per year on it, according to Dot Esports. And Overwatch, it's fair to say, is not struggling.

The more likely, middle-of-the-road scenario apparently puts Overwatch's "base valuation" at $100 million annually, a far cry from what the mighty World of Warcraft pulls in but still nothing to sneeze at. That includes $32 million from licensing and advertising, $30 million in sponsorships, and the balance in ticket and merchandise sales. And as WoW inevitably declines, Overwatch also represents Blizzard's most obvious source of replacement revenue, especially if it can take advantage of the best-case scenario predicted by Morgan Stanley: Esports goes mainstream, Activision is successful in its effort to "create the ESPN of esports," and the licensing, advertising, and sponsorship money starts to roll in seriously fast and furious.

The foundation appears to be in place—the report says 17 million of Overwatch's 25 million registered players are monthly active users, which is a tremendous retention rate after nearly a full year of release—but the trick for Blizzard is to convert a significant number of those people into dedicated esports fans. To achieve the $100 million valuation, Morgan Stanley estimated that Overwatch will need 72,000 average active viewers for regular season matches and 7.7 million for the playoffs; to hit the $720 million figure, those numbers go up to 75,000 for the regular season, and 12 million for the playoffs. That's a huge number, but not necessarily out of reach: 14 million people tuned in for the League of Legends World Championship finals at the end of 2015, and esports audiences have only grown since then.

The report also suggests that building "tension and storylines" around Overwatch competition will help fuel the "growing esports passion." I can't be entirely certain of the context of that statement without access to the original document (which isn't publicly available), but I like to think that it will somehow involve Mike Morhaime leaping from behind a curtain shouting "It was me all along!" after which a guy from Cloud 9 gets put through a table. Unlikely, perhaps, but you better believe that's a virtual ticket event I'd happily pay for.

We've reached out to Morgan Stanley for more information on the report.